1. Field
Embodiments of the present invention relate generally to fund compliance tools. More specifically, embodiments of the invention relate to computer systems and methods for facilitating compliance with hedge fund regulations.
2. Description of Related Art
Numerous federal and state laws require that hedge fund (“find”) managers comply with regulations issued by various federal and state agencies. Example federal agencies include the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the National Association of Securities Dealers (NASD), and the United States Treasury. Example state agencies include departments of banking and consumer fraud. Regulations promulgated by these agencies and others aim to protect investors in the funds by containing, among other things, provisions to promote investor awareness of risks associated with these kinds of investment vehicles.
Depending on their particular operational mode, finds and their managers may be subject to complex combinations of regulations of one, some, or all of the above exemplary agencies and/or other agencies. Additionally, the regulations themselves comprise a fluid, evolving body of laws, for they may be modified through, for example, opinion, amendment, or administrative ruling. Fund managers may be faced with a myriad of issues to address, such as investment management procedures, trading practices, personal trading guidelines, disclosure to clients and/or investors, custody/safeguarding of assets, record keeping, privacy policies, and disaster recovery/back-up plans. Also, many of the regulations for investment managers may be inapplicable to any particular investment manager. Hence, it is a challenge for a specific investment manager to focus on the relevant regulations, and maintain that focus on current versions of the applicable regulations.
In order to ensure compliance with regulations, fund managers have historically needed to expend much time, money, and effort to develop and maintain a compliance infrastructure and associated business practices. For instance, necessary legal research and preparation of documentation (e.g., required reports and documentation of compliance practices) may be extensive, time-consuming, and labor-intensive. Additionally, to respond to rapidly changing regulatory environments, find managers may need to seek costly on-site assistance from outside counsel and/or consultants.
Given the attendant costs and complexities, some fund managers have not achieved full compliance with applicable regulations. Moreover, such costs and complexities may act as barriers to entry, preventing competent individuals from serving as find managers, thus depriving investors of additional investment options in the marketplace.